BOND REPORT: Treasury Yields Travel Lower As Health Care Bill

By Sunny Oh Features Dow Jones Newswires

10-year Treasury yields slips below 2.30%

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Treasury yields declined Tuesday after defections after Senate Republicans abandon a vote on a bill to repeal and replace Obamacare, casting doubt on the viability of President Donald Trump's agenda.

The benchmark 10-year Treasury yield fell 3.9 basis points to 2.278. The 30-year note lost 3.7 basis points to 2.866%, while the 2-year note edged lower 1.2 basis point to 1.352%. Bond prices move inversely to yields.

Long-dated Treasury yields were under pressure after Senate Majority Leader Mitch McConnell late Monday announced a retreat from the push to pass a new health care bill.

See: GOP health-care bill scuttled; McConnell calls for repeal vote (http://www.marketwatch.com/story/health-care-overhaul-seems-sunk-as-two-more-republicans-oppose-senate-bill-2017-07-17)

The drama from Capitol Hill represents the latest blow to President Donald Trump's pro-growth agenda. After several months of a congressional logjam, investors' expectations for an end to political deadlock has faded, with many now pricing out a "Trump Bump," the belief that fiscal reforms would be inflationary and force the Fed to tighten rates at a more aggressive pace.

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"The Senate's health care legislation appears to lack the necessary support to pass, and while there is a chance the effort could be revived, this looks increasingly difficult," said Goldman Sachs economists led by Jan Hatzius.

With other fights on the horizon including a debt ceiling showdown in fall, the Trump administration will look ahead to pass other parts of its agenda. But investors remain skeptical that the problems that plagued the health care bill will go away, leaving in doubt how much of his reforms will be signed into law this year.

Also read: Could GOP health-care bill's implosion actually lead to bipartisan solution? (http://www.marketwatch.com/story/could-gop-health-care-bills-implosion-lead-to-bipartisan-solution-2017-07-17)

On the economic data front, import prices in June fell 0.2% as the cost of oil slipped, one of many data releases that present a rocky picture for higher consumer prices.

Investors will also watch for the Treasury International Capital report for May at 4 p.m. The report is monitored by investors to track flows from foreign investors' and central banks. International investment comprises a large portion of the market for U.S. government paper, but has remained relatively stable fluctuating around $4 trillion in holdings.

(END) Dow Jones Newswires

July 18, 2017 10:11 ET (14:11 GMT)